Brent crude hit $85.41 per barrel after it chalked up $4.01 or 4.93 per cent on Thursday, extending a rally triggered by the US-Israel war with Iran.
The US West Texas Intermediate crude, on its part, settled at $81.01 per barrel, its highest since July 2024, after increasing by $6.35 or 8.51 per cent yesterday.
The escalating US-Israeli war with Iran continues to disrupt supplies and shipping, driving some major producers in the Middle East to reduce output.
The crisis around the Strait of Hormuz has become a severe stress test for both Gulf crude suppliers and their key buyers.
Around 300 oil tankers remained inside the Strait of Hormuz after vessel traffic in and out of the chokepoint nearly halted following the outbreak of the war.
Despite repeated assurances from the US that the waterway was never formally blocked, satellite tracking suggests that no oil or product tankers transited the strait since March 1.
The disruption immediately placed the world’s largest importers under pressure as the strait is the world’s busiest oil transit chokepoint through which the equivalent of 20 per cent of global daily oil consumption passes.
Analysts noted that crude oil supplies from Iraq and Kuwait could start shutting down within days if the Strait of Hormuz remains closed, potentially cutting 3.3 million barrels per day by day eight of the conflict.
An oil tanker anchored off Kuwait reported a large explosion and a subsequent leak from a cargo tank, raising environmental worries.
Iraq, the second-largest crude producer in the Organisation of the Petroleum Exporting Countries (OPEC), has cut output by nearly 1.5 million barrels per day due to a lack of storage and an export route, while Qatar, the biggest liquefied natural gas producer in the Gulf, declared force majeure on gas exports on Wednesday.
A drone strike hit oil infrastructure in Bahrain, adding to concerns about the vulnerability of Gulf refining assets as regional tensions escalate. Damage to a refinery can tighten product markets almost immediately, pushing up prices for petrol, diesel, and jet fuel.
Already, some oil refineries in the Middle East, China and India have shut their crude units.